Abet Justice L.L.C. et al v. First America Trustee Servicing Solutions, L.L.C. et al

Filing 104

ORDER. IT IS HEREBY ORDERED that 55 Motion to Dismiss and 57 Motion to Dismiss are GRANTED in part and DENIED in part. IT IS FURTHER ORDERED that 64 Motion to Dismiss, 76 Motion for Summary Judgment, and 78 Motion for Summary Judgment are DENIED without prejudice. Signed by Judge James C. Mahan on 3/23/16. (Copies have been distributed pursuant to the NEF - TR)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 ABET JUSTICE LLC, et al., Case No. 2:14-CV-908 JCM (GWF) 8 Plaintiff(s), 9 10 11 ORDER v. FIRST AMERICA TRUSTEE SERVICING SOLUTIONS, LLC, et al., Defendant(s). 12 13 Presently before the court is counter-defendant Sunridge Heights Homeowners’ 14 15 16 Association’s (“Sunridge Heights”) motion to dismiss. (Doc. #55). Defendant Bank of New York Mellon (“BONY”) filed a response. (Doc. #62). Sunridge Heights did not filed a reply. Also before the court is plaintiff Abet Justice LLC and Guetachew Fikrou’s (“Abet”) 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge motion to dismiss, or in the alternative motion for summary judgment. (Doc. #57). Defendants First America Trustee Servicing Solutions, LLC (“First American”), Residential Credit Solutions, Inc. (“RCS”), and BONY filed a response and countermotion, (docs. #63, 64), and Abet filed a reply and response. (Docs. # 66, 67). I. Background The present case involves a dispute over real property located at 2138 Montana Pine Drive in Henderson, Nevada (“the property”). (Doc. #55). Shannon Moore purchased the property on March 20, 2007. (Doc. #62). Moore financed her purchase with a $556,000.00 loan from Countrywide Home Loans, Inc. (hereinafter “Countrywide”). (Id.). The promissory note listed Countrywide as the note holder. (Id.). 1 Countrywide sold the note to BONY on November 9, 20101, and an assignment of deed of 2 trust was recorded on March 7, 2014 that clarified the assignment to BONY. (Id.). Moore’s loan 3 was secured via a deed of trust encumbering the property. (Id.). 4 At some point, Moore stopped paying her HOA dues to Sunridge Heights. On September 5 11, 2013, Sunridge Heights filed a notice of delinquent assessment lien on the property. (Id.). On 6 October 28, 2013, Sunridge Heights recorded a notice of default and election to sell the property 7 under its HOA lien. (Id.). 8 On March 17, 2014, Sunridge Heights recorded a notice of a foreclosure sale. (Id.). 9 Sunridge Heights held its non-judicial foreclosure sale on April 11, 2014, where Abet purchased 10 a foreclosure deed for $42,100.00. (Doc. #55). On April 14, 2014, Abet acquired its alleged interest 11 in the property when it recorded its foreclosure deed. (Doc. # 62 at 5-6). 12 Plaintiff Abet filed its original complaint in state court asserting two causes of action: (1) 13 quiet title; and (2) declaratory relief. (Id.). BONY’s amended answer and counterclaim also states 14 a claim for quiet title and declaratory relief as well as five additional causes of action: (1) wrongful 15 foreclosure; (2) negligence; (3) negligence per se; (4) breach of contract; and (5) preliminary and 16 permanent injunction. (Doc. #49). 17 II. Legal Standard 18 A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which relief 19 can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and 20 plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); 21 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed 22 factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the 23 elements of a cause of action.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted). 24 “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 25 26 BONY’s opposition, (doc. #62), erroneously lists the recording date of the assignment of mortgage as November 9, 2011. However, the true and correct copy of the assignment, recorded as book and instrument number 20101109-0001966 and attached to BONY’s request for judicial notice in connection with its motion to dismiss plaintiff’s complaint as Exhibit A.3, (doc. #7), lists the recording date at November 9, 2010. 1 27 28 James C. Mahan U.S. District Judge -2- 1 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to 2 “state a claim to relief that is plausible on its face.” Iqbal, 129 S.Ct. At 1949 (citation omitted). 3 In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply 4 when considering motions to dismiss. First, the court must accept as true all well-pled factual 5 allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. 6 Id. at 1950. Mere recitations of the elements of a cause of action, supported only by conclusory 7 statements, do not suffice. Id. at 1949. Second, the court must consider whether the factual 8 allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially 9 plausible when the plaintiff’s complaint alleges facts that allow the court to draw a reasonable 10 inference that the defendant is liable for the alleged misconduct. Id. at 1949. 11 Where the complaint does not “permit the court to infer more than the mere possibility of 12 misconduct, the complaint has alleged, but it has not shown, that the pleader is entitled to relief.” 13 Id. (internal quotations and alterations omitted). When the allegations in a complaint have not 14 crossed the line from conceivable to plausible, plaintiff’s claim must be dismissed. Twombly, 550 15 U.S. at 570. The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 16 17 1216 (9th Cir. 2011). The Starr court stated, 18 First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation. 19 20 21 22 Id. 23 III. Discussion 24 a. Sunridge Heights’ motion to dismiss BONY’s counterclaims 25 26 Sunridge Heights argues that it should be dismissed from the action because it was not an 27 original party to the complaint and, therefore, the counterclaim against it is procedurally improper. 28 Furthermore, Sunridge Heights argues it is not a necessary party to the action. Finally, Sunridge James C. Mahan U.S. District Judge -3- 1 Heights contends that the court does not have jurisdiction over BONY’s claims because it has not 2 yet submitted them for mediation in accordance with N.R.S. § 38.310. (Doc. #55). 3 i. Sunridge Heights as a party to BONY’s counterclaim 4 5 Federal Rule of Civil Procedure 13(a) states: “[a] pleading must state as a counterclaim 6 any claim that . . . the pleader has against an opposing party if the claim (A) arises out of the 7 transaction or occurrence that is the subject matter of the opposing party’s claim; and (B) does not 8 require adding another party over whom the court cannot acquire jurisdiction.” Subsection (h) 9 provides that Federal Rules of Civil Procedure 19 and 20 “govern the addition of a person as a 10 party to a counterclaim . . . .” Fed. R. Civ. P. 13(h). 11 Under Fed. R. Civ. P. 19(a), a party must be joined as a “required” party in two 12 circumstances: (1) when “the court cannot accord complete relief among existing parties” in that 13 party’s absence, or (2) when the absent party “claims an interest relating to the subject of the 14 action” and resolving the action in the person’s absence may, as a practical matter, “impair or 15 impede the person’s ability to protect the interest,” or may “leave an existing party subject to a 16 substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the 17 interest.” Fed. R. Civ. P. 19(a)(1). 18 Sunridge Heights is a necessary party to this action based on the current allegations and 19 relief sought. Sunridge Heights has a present interest in the property because defendants allege 20 that the HOA foreclosure sale is void. See, e.g., U.S. Bank, N.A. v. Ascente Homeowners Ass'n, 21 No. 2:15-cv-00302-JAD-VCF, 2015 WL 8780157, at *2 (D. Nev. Dec. 15, 2015). If defendants 22 succeed in invalidating the sale, ownership of the property would revert to Ms. Moore, Abet would 23 be entitled to recover from Sunridge Heights, and Sunridge Heights’ lien against the property 24 would be restored. Consequently, at this point, it appears that Sunridge Heights is a necessary party 25 to the suit. See id.; Nationstar Mortgage, LLC v. Falls at Hidden Canyon Homeowners Ass'n, No. 26 2:15-cv-01287-RCJ-VCF, 2015 WL 7069298, at *2 (D. Nev. Nov. 12, 2015). 27 28 James C. Mahan U.S. District Judge -4- 1 2 3 4 ii. NRS 38.320's mediation requirement Sunridge Heights next argues N.R.S. § 38.310 requires a court to dismiss any claim relating to the interpretation, application, or enforcement of CC & Rs if the plaintiff has not first mediated its claim before the Nevada Real Estate Division (“NRED”). (Doc. #55). 5 6 a. Negligence, negligence per se, breach of contract wrongful 7 foreclosure 8 N.R.S. § 38.300(3) defines a “civil action” as including any actions for monetary damages 9 or equitable relief. BONY’s claims for wrongful foreclosure, negligence, negligence per se, and 10 breach of contract all require this court to interpret “covenants, conditions or restrictions applicable 11 to the property” or “any bylaws, rules and regulations of an 12 (1)(b). Furthermore, these claims “[exist] separate from the title to land.” McKnight Family, LLP 13 v. Adept Mgmt., 310 P.3d 555, 558 (Nev. 2013); see 1597 Ashfield Valley Trust v. Fed. Nat. 14 Mortgage Ass'n Sys., No. 2:14-CV-2123-JCM-GWF, 2015 WL 4581220, at *1 (D. Nev. July 28, 15 2015); Nationstar Mortgage LLC v. Berezovsky, No. 2:15-cv-909-JCM-CWH, 2016 WL 1064477, 16 at *1 (D. Nev. Mar. 17, 2016). association . . . .” N.R.S. § 38.310 17 Unlike a claim for quiet title, “[a] wrongful foreclosure claim challenges the authority 18 behind the foreclosure, not the foreclosure act itself.” Id. at 559 (citing Collins v. Union Fed. Sav. 19 & Loan, 662 P.2d 610, 623 (Nev.1983). “The material issue in a wrongful foreclosure claim is 20 whether ‘the trustor was in default when the power of sale was exercised.’ “ Turbay v. Bank of 21 Am., N.A., No. 2:12–CV–1367–JCM–PAL; 2013 WL 1145212, at *4 (quoting Collins, 662 P.2d 22 at 623). “Deciding a wrongful foreclosure claim against a homeowners' association involves 23 interpreting covenants, conditions or restrictions applicable to residential property.” 24 McKnight, 310 P.3d at 559. “This type of interpretation falls under NRS 38.310.” Id. 25 Consequently, BONY must submit a complaint through mediation or a certified program 26 before proceeding with a civil action for negligence, negligence per se, breach of contract, and 27 wrongful foreclosure. See e.g., 1597 Ashfield Valley Trust, 2015 WL 4581220, at *5-6; Saticoy 28 Bay, LLC Series 1702 Empire Mine v. Fed. Nat'l Mortgage Ass'n, No. 214-cv-01975-KJD-NJK, James C. Mahan U.S. District Judge -5- 1 2015 WL 5709484, at *4 (D. Nev. Sept. 29, 2015). Therefore, BONY’s claims are dismissed 2 without prejudice. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 b. Quiet title and declaratory relief A claim to quiet title is exempt from N.R.S. § 38.310 because “it requires the court to determine who holds superior title to a land parcel.” McKnight Family, L.L.P. v. Adept Mgmt., 310 P.3d 555, 559 (Nev. 2013). In McKnight, the Nevada Supreme Court reversed the lower court’s dismissal of plaintiff’s quiet title and other claims because the parties had not participated in alternative dispute resolution before the plaintiff filed suit. Id. at 557. The court noted that, while the other claims for relief were properly dismissed, the quiet title claim was not a civil action as defined in N.R.S. § 38.300(3), and was therefore exempt from the requirements of N.R.S. § 38.310. Id. at 559. BONY’s quiet title claim does not fall within N.R.S. § 38.300(3)’s definition of a civil action and is therefore not subject to N.R.S. § 38.310's mediation requirement. Accordingly, the court denies Sunridge Heights’ motion to dismiss BONY’s claim to quiet title for failure to participate in the NRED mediation program. In Nevada, “[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action for the purpose of determining such adverse claim.” N.R.S. § 40.010. “A plea to quiet title does not require any particular elements, but ‘each party must plead and prove his or her own claim to the property in question’ and a ‘plaintiff’s right to relief therefore depends on superiority of title.’” Chapman v. Deutsche Bank Nat'l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (quoting Yokeno v. Mafnas, 973 F.2d 803, 808 (9th Cir.1992)). As explained above, the court cannot dismiss Sunridge Heights as a party to the quiet title action based on BONY’s current allegations and relief sought. See, e.g., Nationstar Mortgage, LLC v. Falls at Hidden Canyon Homeowners Ass'n. 2015 WL 7069298, *3 (D. Nev. Nov. 12, 2015); see also U.S. Bank, N.A. v. Ascente Homeowners Ass'n, 2015 WL 8780157, *2 (D. Nev. Dec. 15, 2015). 27 28 James C. Mahan U.S. District Judge -6- ii. 1 Injunctive relief 2 Finally, BONY’s second cause of action is for injunctive relief. The court follows the well- 3 settled rule in that a claim for “injunctive relief” standing alone is not a cause of action. See, e.g., 4 In re Wal–Mart Wage & Hour Employment Practices Litig ., 490 F.Supp.2d 1091, 1130 (D. Nev. 5 2007); Tillman v. Quality Loan Serv. Corp., No. 2:12-CV-346 JCM RJJ, 2012 WL 1279939, at *3 6 (D. Nev. Apr. 13, 2012) (“injunctive relief is a remedy, not an independent cause of 7 action”) Jensen v. Quality Loan Serv. Corp., 702 F.Supp.2d 1183, 1201 (E.D. Cal. 2010) (“A 8 request for injunctive relief by itself does not state a cause of action”). Injunctive relief may be 9 available if BONY is entitled to such a remedy on an independent cause of action. BONY’s claim 10 for injunctive relief is therefore dismissed. 11 b. 12 judgment Abet and BONY’s motions to dismiss or in the alternative motions for summary 13 Abet’s motion to dismiss make two arguments: “1) the court lacks jurisdictions to hear this 14 case because BONY has failed to submit its causes of action for wrongful foreclosure, negligence, 15 and negligence per se to mandatory mediation as required by Nevada State law pursuant to NRS 16 38.300 et seq. And 2) Abet moves to dismiss the First Cause of Action (Quiet Title/ Declaratory 17 Relief pursuant to NRS 30.000 et seq. and NRS 40.010 et seq. versus Buyer and HOA) and the 18 Second Cause of Action (Preliminary and Permanent Injunction versus the Buyer) because . . . 19 [t]hese are the same causes of action that ABET filed against BONY.” (Doc. #57). As the court 20 has already addressed these claims in Sunridge Heights’ motion to dismiss, the court accordingly 21 grants Abet’s motion to dismiss in part, consistent with the above analysis. 22 To the extent that Abet’s motion to dismiss (doc. #57) and BONY’s response (doc. #64) 23 are intended instead as requests for summary judgment, the court denies them both without 24 prejudice. 25 Collectively, plaintiffs and defendants have filed no fewer than eight motions for summary 26 judgment during the course of litigation, have flouted the Federal Rules of Civil Procedure at every 27 stage of the proceedings, and have wasted this court’s time and judicial resources attempting to 28 untangle the filings and claims in this case. James C. Mahan U.S. District Judge -7- 1 There have been at least two requests for judicial notice that the court has seen and well 2 over 1,000 pages of exhibits and fractured theories for relief scattered throughout the numerous 3 motions for summary judgment. For example, after Abet filed the present motion to dismiss or 4 motion for summary judgment (doc. #57), it filed another motion for summary judgment (doc. 5 #76) requesting that the court take judicial notice of the prior motion and all of the filings related 6 to it, and then appears to recite many of the same arguments in greater detail in its latter motion 7 for summary judgment. (Doc. #76). 8 BONY likewise has filed multiple motions for summary judgment, each of which contains 9 increasingly detailed and new theories for recovery. Each of BONY’s motions disregards local 10 rule 7-4’s page limitations, and collectively they amount to seventy-four pages worth of motions 11 for summary judgment, not including exhibits. Furthermore, in light of the court’s above findings 12 dismissing all of BONY’s claims except its claim for quiet title, many of BONY’s arguments are 13 no longer applicable to this action. 14 It is well established that the district courts have the inherent power to control their dockets 15 and manage their affairs; this includes the power to strike or deny motions to streamline motion 16 practice and promote judicial efficiency. Ready Transp., Inc. v. AAR Mfg., Inc., 627 F.3d 402, 404– 17 05 (9th Cir. 2010). In light of this unnecessarily scattered approach to summary-judgment briefing, 18 coupled with the evolving state of the record, the court will exercise its inherent power to manage 19 the docket, deny without prejudice and disregard the pending summary-judgment filings, and 20 provide clear instructions for the renewed briefing. 21 The parties will have twenty-one days from the filing of this order to each file a renewed 22 motion for summary judgment. Briefing will proceed under the schedule provided by Local Rule 23 7-2, to which the parties must adhere. No supplemental briefing will be entertained. 24 When preparing and submitting the renewed briefing, the parties must follow these 25 instructions: 1) the page limits in Local Rule 7-4 apply. 2) Requests for judicial notice and to delay 26 summary judgment under FRCP 56(d) should be contained within the summary-judgment briefs 27 themselves—not framed as separate motions or requests; they are essential components of the 28 parties' summary judgment arguments. 3) Any supporting affidavits or declarations must be filed James C. Mahan U.S. District Judge -8- 1 with the motion, response, or reply as exhibits; they should not be filed as separate documents. 4) 2 The parties must heed local rule 10-3(a)'s admonition that exhibits must not be “unnecessarily 3 voluminous.” 5) Courtesy copies of these filings must be delivered to chambers. 4 IV. 5 Conclusion Accordingly, 6 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Sunridge Heights’ 7 motion to dismiss (doc. #55), be, and the same hereby is, GRANTED in part and DENIED in part, 8 consistent with the foregoing. 9 IT IS FURTHER ORDERED that Abet’s motion to dismiss BONY’s counterclaim, or in 10 the alternative, motion for summary judgment, (doc. #57), be, and the same hereby is, GRANTED 11 in part and DENIED in part, consistent with the foregoing. 12 IT IS FURTHER ORDERED that BONY’s countermotion to dismiss, or in the alternative, 13 motion for summary judgment, (doc. #64), be, and the same hereby is, DENIED without prejudice. 14 IT IS FURTHER ORDERED that Abet’s motion for summary judgment, (doc. #76), be, 15 and the same hereby is, DENIED without prejudice. 16 IT IS FURTHER ORDERED that BONY’s motion for summary judgment, (doc. #78), be, and the 17 same hereby is, DENIED without prejudice. 18 19 20 DATED March 23, 2016. __________________________________________ UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -9-

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